SHADOWED COMPLIANCE: A COMPARATIVE LEGAL APPRAISAL OF PAKISTAN’S AML/CTF REGIME AND UNITED NATIONS NORMS

Abstract

Money laundering and terrorism financing transnational threats to national security and economic integrity. The work is an exploration of this concept by researching the effectiveness of anti-money laundering (AML) and counter-terrorism financing (CTF) regulations through the comparative legal review of the statutory tools on countering money laundering in Pakistan and the standards of the United Nations (UN). The main research question is to determine the gap between the domestic law in specific the Anti-Money laundering Act, 2010 and Anti-Terrorism Act, 1997 in Pakistan and the international best practices as described by organizations like the Financial Action Task Force (FATF), UNODC and IMF. Based on a doctrinal legal approach, the research will consider the applicable statutory texts, judicial precedent, FATF mutual evaluation reports, and institutional compliance reports. The study postulates that poor institutional regulation and conceptual ambiguities in the Pakistani AML frameworks are possible causes of the grey listing and implementation shortcomings of the AML framework in Pakistan. Of particular importance, the critical conclusions point to the systemic problems, such as the failure of the inter-agency coordination, insufficient judicial capacity, inconsistent adherence to the suspicious transaction reporting (STR) protocol, and insufficient efficacy to the Recommendation of 40 by the FATF. The regime in Pakistan is making progress on a fly in comparison to the UN standard model laws but this progress is stunted because of political uncertainty and lack of resources to set regulatory agencies in place. The paper finds that Pakistan needs to institutionalize the Financial Monitoring Unit (FMU) better, enhance the cross-governmental collaboration, and conduct certain regular law amendments in respect of the revolutionized FATF requirements. Future directions include using the mechanisms of financial surveillance in digital form and some type of regional cooperation that can make AML/CTF frameworks more resilient.